Local Chrysler Dealers Chopped

FYI, The list of nearby Chrysler/Dodge/Jeep dealers who will lose their franchises June 9:

Pohanka Chrysler Dodge, Leesburg
Dulles Jeep, Leesburg
Ourisman Dodge, Chantilly
Fairfax Chrysler, Fairfax


The closest dealer to us for service: Fair Oaks Chrysler Jeep, Chantilly.

 

I really don't understand this. As I understand it, the dealers purchase the cars from Chrysler and then turn around and sell them, but ultimately the inventory belongs to the dealer. WHY wouldn't they keep them open so they can sell their inventory???? It doesn't make sense to me, so would someone who understand explain it?

 

This article starts to address this issue.

http://www.businessweek.com/autos/autobeat/archives/2009/05/car_dealers_are.html

 

Here's some insider info most folks aren't privy to. You are correct, once Chrysler "sells" the car or truck to the dealer, the dealer "owns" it and is ultmately responsible for selling the vehicle. However, I am not aware of any dealer nationwide who has the cash to absolutely own every car on their lot, so they have to "floor plan" these vehicle through a bank or the lending arm of the manufacturer (GMAC, Chrysler Financial, Honda Financial, etc.). So technically, the delaer doesn't own his vehicle inventory -- the bank does. Without a standing franchise agreement, no bank is going to guarantee millions of dollars worth of new cars, and the last thing a defunct dealer needs is millions of dollars of vehicles on his lot he'll have a bear of a time selling (especially without service support, see below). That's why dealers are more apt to really stretch to sell a car at the end of the month -- that "sales goal" they are trying to hit that they always mention during negotiations? It is this program!

Also, there is more than just the floor plan to consider. Every Chrysler dealer participates in a monthly bonus program through corporate called VPA. Essentially, at the end of the month, the dealership receives between $500 - $1,500 per vehicle sold depending on the total sales tier they achieve. For example, if a dealer hits his VPA target of 50 cars for the month, he gets back $75,000, which goes a long way in helping a dealer remain profitable in this day and age of negotiating new car purchase prices below invoice and dipping into the holdback money.

Lastly, beyond car sales, a dealership relies on Chrysler to support its Service and Parts operations with training, upgraded equipment, warranty coverage, daily parts deliveries from the depot in Cleveland, etc. The dealers who have lost their franchise agreement lose all these supporting functions as well.

 

WHOOOPS! Sorry, folks. The last sentence of paragraph one should be the last sentence of paragraph two. The VPA program is the reimbursement program I was referring to. Sorry for the confusion.

 

I am kind of stunned to hear about Dulles Jeep (Motor Cars), the owners have been clients of mine for 2 decades.

Are you sure it isn't Dulles Chrysler, which is down the street from Dulles Jeep/Kia/Subaru also known as Dulles Motorcars?

 

Pea,

From the official list out of Auburn Hills, it's definately the two dealers on Catoctin Circle who are losing their franchises:

DULLES MOTOR CARS, INC.
DBA DULLES JEEP
107 CATOCTIN CIRCLE SOUTHEAST
LEESBURG, VA 20175-3712

POHANKA OF LEESBURG, INC.
DBA POHANKA CHRYSLER DODGE OF LEESBURG
219 CATOCTIN CIR SE
LEESBURG, VA 20175-3707

FWIW, Dulles Jeep has had a very contentious relationship with Chrysler -- notice the brand signing for Jeep is almost missing, but Subaru is displayed prominately? Subaru paid for the dealership renovations they did a few years ago, hence their favored status. Chrysler has been trying to convince Dulles to sell the Jeep franchise to Leesburg Chrysler/Pohanka for years, but they wanted too much money for it.

 

Dang - that is such a shame, thanks for the clarification.

 

The silver lining is Dulles Subaru/Kia will still survive and hopefully continue to prosper.

Pohanka Chrysler/Dodge has no other brands at the Leesburg location. And the latest word is Pohanka leadership isn't doing much to help the 40 or so employees there i.e. relocating jobs to other Pohanka dealerships. But it's early, so I'll try to give them the benefit of the doubt.

 

Last I heard was the Pohanka Chrysler/ Dodge in Leesburg may take on the Jeep function of Dulles or Dulles may take on the Chrysler/ Dodge franchise. I think they are in negotiations with Chrysler to consolidate so we may not lose both dealers. (I was in there the other day checking out trucks and got to talking).

 

This was reported in the online version of Leesburg Today. If both dealers could work something out to support "Project Genesis" (Chrysler's ideal scenario of Chrysler, Dodge, and Jeep in one location), it would seem foolish to completely close down Loudon's only dealerships. I know Pohanka would love to add Jeep to its stable if Dulles were willing to sell at a resonable price, and if Chrysler would OK the transaction.

That being said:

"According to Chrysler Vice Chairman (and only member of the ruling triad who hasn’t announced he’s leaving) Jim Press, the dealer cuts are a done deal and become effective on June 9. Press said Chrysler will not review its decisions and there will be no appeals process. The terminated dealers will not be offered settlements. He also said Chrysler will not buy any inventory but will help affected dealers sell their stocks of vehicles and parts to other dealers, a process he estimated would take about six weeks."

I guess we'll just see what happens in the next three weeks.

 

FYI,

From BusinessWeek: A Chrysler Owner's Guide To Dealership Closings

 

I hope they work something out. I'd hate to see them go. We've bought three cars there.